In February of 2022, Bennett Grimm got a letter from the Internal Revenue Service saying that it had processed his 2021 amended tax return and he should expect his check in two to three weeks’ time. Seems like a time to celebrate, but Grimm still hasn’t received that check. While more than 90% of taxpayers choose to get refunds by direct deposit into their bank account, there are still many Americans who prefer refunds the old-fashioned way. Risk assessment is an important concept that is applicable to our lives. We do it every day to determine what is safe and what is not. And generally, it isn’t safe to share bank account information with anyone you don’t know. So some taxpayers prefer paper checks versus sharing their bank information with the IRS.
But these refunds delivered by mail have become a popular target for fraudsters, according to a Treasury Department report in 2020. And while these victims can get checks reissued, unfortunately the reissued checks are also getting stolen. Which is what happened to Grimm. He is now waiting on a third check. Those who elect to receive a paper check can’t switch to direct deposit for that tax year in the event of lost or stolen refunds. “You can’t win,” said Grimm, who is owed a refund of nearly $96,000 after the sale of his medical practice.
The Treasury’s Financial Crimes Enforcement Network issued an alert on a nationwide increase in mail theft-related check fraud last year, and an update last month says that the problem isn’t letting up. A technology fix is under way that would allow people to switch their preference on the IRS site, but the update is a few years away, said IRS Commissioner Danny Werfel. “We strongly urge direct deposit,” said Werfel. “It’s the fastest and safest way for us to get taxpayers their refunds.”
Shout out to the I.R.S. in its continual fight against fraud.
Today’s Fraud of The Day is based on article “Millions of Dollars in Tax Refund Checks Are Getting Stolen” published by The Wall Street Journal on October 4, 2024.
Taxpayer refund checks are getting stolen in the mail. And then, when the Treasury Department issues the taxpayer a new check through the mail, the replacement is getting stolen too.
Rep. Nicole Malliotakis (R., N.Y.) said her office has fielded 218 cases of stolen checks totaling $3.8 million, with amounts ranging from a few hundred dollars up to $500,000. In one case, it took a constituent four tries to get a refund check delivered.
